U.S. markets traded higher across the board with near-term resistance and all-time highs holding. The Russell 2000 showed the most strength after rising 0.7% while clearing the 1,500 level.
The Dow gained 0.3% to clear the 23,400 level and is less than 1% away from a record high. The S&P 500 and Nasdaq advanced 0.1% while finishing just below 2,600 and 6,800, respectively, and also remain within striking distance of lifetime highs.
Financials and Industrials showed the most strength after gaining 0.5% while Technology added 0.4%. Laggards included Health Care and Utilities fell 0.4% and 0.3% while Energy and Real Estate dipped 0.2%.
Global Economy- European markets closed in positive territory despite the collapse of talks to form a coalition government in Germany for the eurozone’s largest economy.
The Stoxx Europe 600 rallied 0.7% and Germany’s DAX 30 jumped 0.5%. France’s CAC 40 rose 0.4% while the Belgium20 was up 0.2%. UK’s FTSE 100 climbed 0.1%.
German Chancellor Merkel’s attempt to form a new government collapsed after a month of coalition talks fell apart over disputes about migration policies that prompted the Free Democrats to walk out of the negotiations over the weekend.
This could spur Chancellor Merkel to ask German President Steinmeier to order a second national election, most likely in the spring, or form a minority government headed by her Christian Democratic Union.
German October PPI rose 0.3% month-over-month and +2.7% year-over-year, matching expectations.
Asian markets settled mixed with Japan’s Nikkei leading to the downside after giving back 0.6% on weaker-than-expected economic news. China’s Shanghai Composite was higher by 0.3% while Hong Kong’s Hang Seng Index gained 0.2%.
Australia’s S&P/ASX 200 was down 0.2% and South Korea’s Kospi was unchanged.
China October new home prices rose in 50 of the 70 cities tracked by the government, an improvement from 44 of the 70 from September.
Japan October trade balance shrank to a surplus of 285.4 billion yen, narrower than expectations of 330.0 billion yen. October exports rose 14% year-over-year, weaker than expectations of 15.7%. October imports rose 18.9% year-over-year, below expectations of 20.2%.
The leading indicators index rose 1.2% in October to a reading of 130.4, versus expectations for it to have been up 0.8%.
Market Sentiment- Federal Reserve chair Janet Yellen confirmed that she will not remain on the Fed board and will retire once Jay Powell has been sworn into his new position.
The iShares 20+ Year Treasury Bond ETF (TLT) pulled back after testing a low of $125.91.
Upper support is at $126-$125.50 was breached but held into the closing bell. Resistance is at $126.25-$126.50 with a move above the latter being a slightly bullish development.
Market Analysis- The Spiders S&P MidCap 400 ETF (MDY) traded to a fresh all-time following today’s run to $336.36.
New resistance is at $336.75-$337.50 on continued closes above $336-$335.75 and the prior high of $335.71 that was reached earlier this month.
Support is at $334-$333.50 on a close back below $335.50. RSI recently held early September support near the 50 level with continued closes above 60 being a bullish development.
The Consumer Discretionary Select Spiders (XLY) continue to show strength following the recent breakout above the $92.50 level with today’s all-time reaching $93.92.
Fresh resistance is at $94-$94.50 on continued closes above $93.50. Rising support is at $93-$92.50 with a move below the latter signaling a short-term top.
RSI is approaching early October resistance at 70 and a level that also held in early June and July.
All the best,
Roger Scott